Although the market had a tough time in August, the US economy and, to a lesser extent, the European economy are holding up well. And there's a slight paradox: future activity indicators have been shabby for weeks now, but the momentum hasn't totally broken, so go figure. Perhaps this is the era of the permanent soft landing.

Now let's talk China and central banks, since there's a lot to say for one Monday. Beijing has pulled out all the stops. We've already talked about the real estate measures introduced on Friday. This weekend, the Chinese Ministry of Finance reduced the tax levied on stock market trading, known as stamp duty. It has been reduced from 0.1% to 0.05% of the transaction. This move is the first of its kind since 2008, when China reduced the stamp duty from 0.3% to 0.1%. The aim is to revitalize a stock market stunted by the country's poor economic performance. At the same time, the CSRC is planning to tighten its rules on IPOs and the refinancing of companies accumulating losses, in the hope of boosting investor confidence in the market. And new equity funds are to be launched. Mao might be turning over in his grave, but it's safe to say that China is doing all it can to revive its capitalism. Investors are cautiously satisfied, but they know that all that glitters is not gold in China. At the same time, the local real estate sector continues to suffer: China Evergrande, which resumed trading this morning after a period of suspension, plunged by over 80%.

The other big topic among investors is the central bankers' meeting in Jackson Hole at the end of last week, a sort of general forum for setting monetary policy guidelines for the months ahead. Unsurprisingly, Fed chief Jerome Powell stole the show. But his message provoked a series of reactions that were not always easy to understand. Basically, Powell remained lukewarm. Neither too hot, nor too cold, which is his trademark, since he's nicknamed Goldilocks. Equity investors, who were afraid of being told off for their excessive optimism, took it positively: stock market indices ended higher. The bond market didn’t react much, but mainly because it had anticipated a slightly less flexible approach by pushing yields higher in the preceding weeks. However, Fed Funds futures show that the probability of a rate hike by the end of the year has risen from 32% to 55% in the space of a week. And the possibility of a rate cut next year has lost credence, while remaining in the majority. As a result, we can conclude that the market expects higher rates for longer, but that this doesn't scare it too much. Not scared enough, the Fed would probably say.

In other news, the IPO market is waking up. After Arm, Instacart and Klaviyo are on the horizon on Wall Street. The excellent tech publication The Information pointed out this weekend that, in these times of money-paying, IPO candidates are generally profitable, which wasn't the case when rates were at rock-bottom. This is a good thing for market credibility.

In the USA, the home price index, the Conference Board's consumer confidence index and the JOLTS job openings survey kick off the action on Tuesday, before the ADP employment report and the latest estimate of Q2 GDP on Wednesday. On Thursday, the Core PCE price index looms, before Friday's August employment figures and the second reading of the PMI and ISM manufacturing indicators. Elsewhere in the world, the highlights will be the first estimates of August inflation in Germany on Wednesday, followed by the official Chinese manufacturing PMI and Eurozone inflation on Thursday. Finally, the other PMI indicators will be released on Friday.

As for company results, we have Costco Wholesale and Salesforce on Wednesday, followed by Broadcom and VMWare.

US stock futures were rising this morning, with S&P 500 Index futures up by 0.5% and Nasdaq 100 futures up 0.6%.

Today's economic highlights:

The dollar is trading at EUR 0.9256 and GBP 0.7946. The ounce of gold is stable at USD 1915. Oil retreats slightly, with North Sea Brent at USD 84.02 a barrel and US light crude WTI at USD 79.98. The yield on 10-year US debt is little changed at 4.23%. Bitcoin is trading at around USD 26,000.

In corporate news:

  • 3M jumped 5.1% in premarket trading on news that the conglomerate had signed a tentative agreement worth more than $5.5 billion to settle a dispute over allegedly defective earplugs sold to the US military.
  • XPeng gained 4.7% in premarket trading after the Chinese electric vehicle manufacturer announced that it would acquire the electric car division of VTC giant Didi in a deal worth up to $744 million.
  • Horizon Therapeutics gained 4.9% in premarket trading after the FTC (Federal Trade Commission) decided to temporarily suspend its initiative to block AMGEN's $27.8 billion takeover of the laboratory.

Analyst recommendations:

  • Abrdn plc: Deutsche Bank maintains its sell recommendation with a price target reduced from GBp 165 to GBp 145.
  • Denbury: Jefferies lowers recommendation from "buy" to "hold". PT up 2% to $91.
  • Meta Platform: CICC initiated coverage with an Outperform recommendation. The PT is up 16% $332.
  • Netflix: Huatai Research initiated coverage with an Add recommendation. PT up 9.8% at $454.
  • Nvidia: Phillip Securities upgrades from accumulate to buy. PT up 40% $645.
  • Tetra Tech: RBC Capital Markets initiated coverage with an Outperform recommendation. PT set at $181.
  • Watches of switz: Societe Generale maintains its Buy recommendation with a price target reduced from GBp 885 to GBp 770.